India in Position for Substantial and Sustained Economic Growth, says Morgan Stanley

Morgan Stanley recently upgraded India's status to 'overweight,' believing that the country is poised for substantial and sustained economic growth at a time when the rest of the world is slowing. Simultaneously, it has downgraded its rating on China to 'equal-weight'.

This upgrade comes just four months after Morgan Stanley upgraded India from 'underweight' to 'equal weight' on March 31, citing factors including a lower valuation premium and a resilient economy. According to Morgan, India has risen from sixth place to first place in its rankings.

"Relative valuations have become less extreme when compared to last October, contributing to this meteoric rise," according to the Morgan Stanley report. According to the brokerage firm, the ongoing trend of a Multipolar World is driving foreign direct investment (FDI) and portfolio flows, and India's reform-oriented and macro-stable agenda strengthens its prospects for robust capital expenditure (capex) and profitability outlook.

Furthermore, the brokerage has upgraded specific sectors for India, including industrials, financials, and consumer discretionary stocks, which are now rated as 'overweight'. It anticipates that these sectors will benefit significantly from India's ongoing structural growth story.